A Single Robot May Cost Up to 6 Workers’ Jobs

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The word “robot” first appeared in a play called “R.U.R.,” written in 1920 by Czech playwright Karel Capek. Depending on who you believe, in just over 100 years, by 2025, the number of U.S. jobs lost to robots could range from a low of around 1.9 million to a high of 6.1 million, or the transition could take “50 or 100 more years.”

The first of these estimates comes from a new paper by economists Daron Acemoglu and Pascual Restrepo analyzing the effect of the increase in industrial robot usage between 1990 and 2017 in U.S. local labor markets.

The second estimate comes from U.S. Treasury Secretary Steve Mnuchin. Responding to a question from Mike Allen of Axios regarding artificial intelligence, Mnuchin said:

I think that is so far in the future — in terms of artificial intelligence taking over American jobs — I think we’re, like, so far away from that, that it is not even on my radar screen.

The economists studied the impact of rising industrial robot usage and found that each new robot per thousand workers reduced the employment-to-population ratio by about 0.18 to 0.34 percentage points, and wages fell between 0.25% and 0.50%. Or, more plainly said, for every robot added to the U.S. economy since 1990, 3.0 to 5.6 workers lost their jobs.

As most people would expect, the impact is greatest on routine, manual assembly type jobs. What most people may not expect is that the rise of robots is only weakly correlated to other factors — such as imports from China and Mexico, computer technology and offshoring — affecting U.S. jobs.

Former Treasury Secretary Larry Summers calls Mnuchin’s statement “indefensible”:

Mnuchin’s comment about the lack of impact of technology on jobs is to economics approximately what global climate change denial is to atmospheric science or what creationism is to biology. Yes, you can debate whether technological change is [a] net good. I certainly believe it is. And you can debate what the job creation effects will be relative to the job destruction effects. I think this is much less clear, given the downward trends in adult employment, especially for men over the past generation. … Almost every economist who has studied the question believes that technology has had a greater impact on the wage structure and on employment than international trade and certainly a far greater impact than whatever increment to trade is the result of much-debated trade agreements.

Now that the Trump administration is about to tackle tax reform, it may be a good time for Mnuchin and others who will be instrumental in economic decisions to take a hard look at some data.